QUESTION 1
You are trying to decide between financing a home with a 15 year fixed rate mortgage that has a 5% interest rate and a 30 year fixed rate mortgage that has a6.5% interest rate. In both cases you finance $320,000. In both cases the loan requires monthly payments of interest and principal. If your objective is build up home equity as quickly as possible you would select the 15 year fixed rate mortgage.
True
False

QUESTION 2
A common form of variable rate mortgage is the 5/1 ARM. The “5” stands for the maturity of the mortgage and the “1” stands for the starting interest rate.
True
False

QUESTION 3
A common form of variable rate mortgage is the 5/1 ARM. The “5” stands for the interest rate and the “1” stands for the maturity.
True
False

QUESTION 4
You have an outstanding balance of $1,000 on your credit card. The bank that issued your credit card will charge you 20% annual interest rate on your outstanding credit card balance. Interest is compounded daily. IF you do not make any payments of principal over three years, your credit card balance will grow to over $4,000.
True
False

QUESTION 5
You are trying to decide between financing a home with a 15 year fixed rate mortgage that has a 5% interest rate and a 30 year fixed rate mortgage that has a 6.5% interest rate. In both cases you finance $320,000. In both cases the loan requires monthly payments of interest and principal. If your objective is to minimize your monthly payments, you would select the 30 year fixed rate mortgage.
True
False

QUESTION 6
You have issued a 30 year a fixed rate mortgage loan to finance the purchase of a home. Interest rates on mortgages all maturities decline every year for four years after you have issued the mortgage loan. You are now locked into paying an interest rate that is above the market rate. There is no way out of this financial contract for 30 years.
True
False

QUESTION 7
If you issue a 5/1 ARM to finance the purchase of a home, then your mortgage payments are insulated from rising interest rates for 5 years.
True
False

QUESTION 8
The annual percentage yield on a credit card takes compounding frequency into account.
True
False

QUESTION 9
You have an outstanding balance of $1,000 on your credit card. The bank that issued your credit card will charge you 20% annual interest rate on your outstanding credit card balance. Interest is compounded daily. IF you do not make any payments of principal over one year, your credit card balance will grow by 20% to $1,200.
True
False

QUESTION 10
The interest payments on a residential mortgage issued to buy a primary residence are tax deductible.
True
False

QUESTION 11
Using data from Bankrate.com and a New York City Location you can see that 30 year fixed mortgage rates for $300,000 and zero points used for buying a home for someone with a credit score of 740 and above are between 3% and 3.5%.
True
False

QUESTION 12
You buy a home that has a price of $400,000. You finance the purchase by issuing a fixed rate 15 year mortgage that has a 5% interest rate for the amount of $320,000. Wells Fargo is the lender. You make monthly payments of principal and interest. You finance the $80,000 from money in your checking account. After one year the value of your home has appreciated by $10,000. Your equity stake in the property has increased by $30,000.
True
False

QUESTION 13
Using data from Bankrate.com and a New York City Location you can see that closing fees for a $300,000 thirty year fixed mortgage for someone with a credit score of 740 and above can be over $1,000.
True
False

QUESTION 14
You buy a home that has a price of $400,000. You finance the purchase by issuing a mortgage loan to Wells Fargo Bank for the amount of $320,000. You finance the $80,000 from money in your checking account. At the time you become the owner of your home (closing date of the transaction) your equity in the property is $80,000.
True
False

QUESTION 15
The interest payments and principal payments on a residential mortgage issued to buy a primary residence are tax deductible.
True
False

QUESTION 16
If you issued a 5/1 variable rate mortgage in 2007 that had an interest rate indexed to the Fed Funds rate, then over the last 8 years you experienced a tremendous increase the interest you owed every year.
True
False

QUESTION 1 You are trying to decide between financing a home with...